Are some VCs „Value Added Venture Capital Investor“?

May 16, 2010 at 8:07 am Leave a comment

During my time as an entrepreneur I’ve got a lot of similar pitches from Venture Capitalists when they were trying to convince my colleagues and me to let them invest:

  • You’ll get smart money
  • We bring money and we’ll add value
  • We’ll support you and your team
  • We have a huge industry network
  • We’ll actively support you
  • and a lot more

At the beginning I wasn’t skeptical about the ability of Venture Capital Investors to add value. Everybody told me more or less the same story and I believed them. I was more than blond an inexperienced about the venture industry, their players and the background of them.

Isn’t it true that every venture capital investor needs to bring more than money onto the table? Otherwise he would be a banker 😉

An entrepreneur has to take a decision, which VC might be the right investor. And the entrepreneur has to take into account that the investor will become shareholder, most likely board member, “co-entrepreneur”, owner of veto rights for particular decisions and adviser for the next years.

What kind of added value can you expect?

Networking – introductions to all kind of people and groups

Business Development – open doors, pitching on conferences, etc.

Recruiting – using its own network, saving money for head hunters and advising in the decision

Raising Equity – support in further investment rounds

Strategic Advice – general discussion and advise about the proposition, positioning, products, expansion, etc.

Save Resources (time and cash) – help to avoid reinventing the wheel and staying focused

PR – an announcement about an investment will increase the credibility and of the startup

Exits – helping to take the right exit and maximize the outcomes

Few investors are able to provide value on all these fronts. But great VCs will help where they can be helpful and staying out of the way the rest of the time.

My advise to all entrepreneurs:

Start your own due diligence about us (the VCs) and call some entrepreneurs who made experiences with the particular VC firm and investment manager you are considering as a potential shareholder and investor.

Most importantly – you are sitting on the driver seat – not we as the VC. You are the entrepreneur and the executive. You build your company, hire great talents, raise money, make strategic decisions and you are the market expert.

A good VC can and will support you without sitting on your driver seat.


Entry filed under: Entrepeneurs, Investments, Startups, Technology, Venture Capital.

Green IT – German technology goes abroad (company building in the US) Updating and upgrading my blog / going to change the language

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This blog is a view from an VC investor, entrepreneur as well as from a private person. You'll find posts about Startups, Technology, Venture Capital, Entrepreneurship and about life and fun. If you enjoy and if you don't please send me your critical comments.

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